Antilles Cement Corp. v. Fortuño

• Citation: 670 F.3d 310
• Decision Date: 17 January 2012
• Docket Number: 09–1583.,Nos. 09–1314,s. 09–1314
• Parties: ANTILLES CEMENT CORPORATION, Plaintiff, Appellee, v. Luis FORTUÑO, Governor of the Commonwealth of Puerto Rico; Antonio M. Sagardía–de–Jesús, Secretary of the Department of Justice; Luis G. Rivera–Marín, Secretary of the Department of Consumer Affairs; Ruben A. Hernández–Gregorat, Secretary of the Department of Transportation and Public Works, Defendants, Appellants,Cemex de Puerto Rico, Inc., f/k/a Puerto Rican Cement Co., Inc., Defendant.Antilles Cement Corporation, Plaintiff, Appellee, v. Cemex de Puerto Rico, Inc., f/k/a Puerto Rican Cement Co., Inc., Defendant, Appellant,Luis Fortuño, Governor of the Commonwealth of Puerto Rico; Antonio M. Sagardía–de–Jesús, Secretary of the Department of Justice; Luis G. Rivera–Marín, Secretary of the Department of Consumer Affairs; Ruben A. Hernández–Gregorat, Secretary of the Department of Transportation and Public Works, Defendants.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

670 F.3d 310

ANTILLES CEMENT CORPORATION, Plaintiff, Appellee,

v.Luis FORTUÑO, Governor of the Commonwealth of Puerto Rico; Antonio M. Sagardía–de–Jesús, Secretary of the Department of Justice; Luis G. Rivera–Marín, Secretary of the Department of Consumer Affairs; Ruben A. Hernández–Gregorat, Secretary of the Department of Transportation and Public Works, Defendants, Appellants,Cemex de Puerto Rico, Inc., f/k/a Puerto Rican Cement Co., Inc., Defendant.Antilles Cement Corporation, Plaintiff, Appellee,

v.Cemex de Puerto Rico, Inc., f/k/a Puerto Rican Cement Co., Inc., Defendant, Appellant,Luis Fortuño, Governor of the Commonwealth of Puerto Rico; Antonio M. Sagardía–de–Jesús, Secretary of the Department of Justice; Luis G. Rivera–Marín, Secretary of the Department of Consumer Affairs; Ruben A. Hernández–Gregorat, Secretary of the Department of Transportation and Public Works, Defendants.

Nos. 09–1314

09–1583.

United States Court of Appeals, First Circuit.

Heard June 8, 2010.Decided Jan. 17, 2012.

Preempted

10 L.P.R.A. § 167e(a)(4) Angel E. Rotger–Sabat, with whom Maymí, Rivera & Rotger, P.S.C. was on brief, for appellant Commonwealth of Puerto Rico.

Juan Ramón Cancio–Ortiz, with whom José Raúl Cancio–Bigas, Charles E. Vilaró–Valderrábano and Cancio Covas & Santiago, LLP were on brief, for appellant Cemex de Puerto Rico, Inc.Hector Saldaña–Egozcue, with whom Carlos Lugo–Fiol and Saldaña & Saldaña–Egozcue, PSC were on brief, for appellee.

Before HOWARD, SELYA and THOMPSON, Circuit Judges.

HOWARD, Circuit Judge.

These appeals present two complex questions of first impression: Does the Buy American Act (BAA), 41 U.S.C. §§ 8301–8305 (formerly codified at 41 U.S.C. §§ 10a–10d), preempt two Puerto Rico statutes? And if not, do those Puerto Rico statutes unconstitutionally interfere with Congress's power to regulate foreign commerce?

The district court initially struck down the two local laws on the ground that they contravene the dormant Foreign Commerce Clause. Antilles Cement Corp. v. Calderón (Antilles I), 288 F.Supp.2d 187, 197–202 (D.P.R.2003). On appeal, we vacated that decision and remanded for consideration of the role of the BAA. Antilles Cement Corp. v. Acevedo Vilá (Antilles II), 408 F.3d 41, 47–49 (1st Cir.2005). On remand, the district court again invalidated the local laws, this time concluding that they are preempted by the BAA. We affirm in part and reverse in part.

I. BACKGROUND

We presume the reader's familiarity with our prior decision in this matter and recount here only the facts needed to illuminate the issues under appeal. Additional background may be found in the related district court decisions. See Antilles Cement Corp. v. Calderón (Antilles IV), No. Civ. 02–1643, slip op. (D.P.R. Jan. 9, 2009); Antilles Cement Corp. v. Acevedo Vilá (Antilles III), No. Civ. 02–1643, 2005 WL 2138753 (D.P.R. Sept. 1, 2005); Antilles I, 288 F.Supp.2d 187.

A. The Statutes at Issue.

The BAA was enacted during the Great Depression to promote American industry and jobs by requiring that certain public projects use only domestically produced materials. See United States v. Rule Indus., Inc., 878 F.2d 535, 538 (1st Cir.1989); see also 76 Cong. Rec. 1892 (1933) (statement of Rep. John J. Cochran) (“In times such as we are now experiencing let us put American labor to work on Government supplies and material.”); see generally Charles F. Szurgot, Comment, The Buy American Act: Reverse Discrimination against Domestic Manufacturers; Implications of the Trade Agreements Act of 1979 on the Rule of Origin Test, 7 Admin. L.J. Am. U. 737, 739–40 (1993). Specifically, the BAA ordains, subject to certain exceptions, that only materials that are mined, produced, and/or manufactured in the United States may be employed for “public use” or utilized in the construction, alteration, or repair of “any public building or public work.” 41 U.S.C. §§ 8302–8303. “Public building,” “public use,” and “public work” are terms of art, defined as “a public building of, use by, and a public work of, the Federal Government, the District of Columbia, Puerto Rico, American Samoa, and the Virgin Islands.” Id. § 8301 (emphasis supplied).

We turn now to the two local laws that are challenged here. The first, P.R. Laws Ann. tit. 3, §§ 927–927h (Law 109), is a preference statute enacted in 1985 to promote the Puerto Rican construction industry. It requires that local construction projects financed with funds from the federal government or the Commonwealth use only “construction materials manufactured in Puerto Rico,” id. §§ 927a–927c, with certain limited exceptions relating to the price, quality, and available quantity of local materials, id. § 927e. Of particular pertinence for present purposes, cement is deemed “manufactured in Puerto Rico” only if it is composed entirely of raw materials from Puerto Rico (unless a particular component is unavailable in industrial quantities locally). Id. § 927(d).

The second challenged statute is P.R. Laws Ann. tit. 10, § 167e (Law 132). Enacted in 2001, it imposes certain labeling requirements on cement sold in Puerto Rico. Among other things, Law 132 requires that foreign-manufactured cement carry a special label warning against its use in government-financed construction projects unless one of the exceptions contained in the BAA and Law 109 applies. See id. § 167e(a)(4). Law 132 also prohibits the sale or distribution of foreign-manufactured cement that is not so labeled and imposes fines for any violation of the labeling requirements. See id. §§ 167e(b), 167f.

B. Travel of the Case.

Antilles Cement Corporation, a firm that imports foreign cement, commenced this action by filing a complaint in the United States District Court for the District of Puerto Rico. Antilles sought a declaratory judgment that Laws 109 and 132 violate the dormant Foreign Commerce Clause and conflict with the BAA. In the early going, Antilles amended its complaint to withdraw the BAA preemption claim.

The district court initially granted summary judgment for Antilles, concluding that Laws 109 and 132 as applied to foreign materials violate the dormant Foreign Commerce Clause. See Antilles I, 288 F.Supp.2d at 197–202. On direct review, we questioned whether the BAA might preempt the laws being challenged, thereby obviating the need for constitutional analysis. See Antilles II, 408 F.3d at 47–49. Moreover, we found the record lacking in factual development. See id. at 49–51. Given these concerns, we vacated the lower court's decision and remanded to determine (1) whether the BAA applies to public projects undertaken by the Commonwealth of Puerto Rico, and, if so, whether it preempts Law 109; (2) whether Law 109 has been applied only to the Commonwealth's own construction projects or, conversely, whether it has been applied to private construction projects subsidized in part by government funds; ¹ and (3) whether the status of Law 132 was altered in light of the answers to these first two questions. See id. at 51.

On remand, the district court concluded that the BAA applies to public projects undertaken by the government of Puerto Rico. See Antilles IV, No. Civ. 02–1643, slip op. at 58–64. It further concluded that the BAA preempts Laws 109 and 132 because the Puerto Rico statutes limit the use of foreign construction materials more stringently than the BAA requires. Id. at 64–66. In view of this holding, the court recognized the lack of need for further constitutional analysis. Id. at 67. Nonetheless, in compliance with our mandate, the court determined that Law 109 has been applied only to public works projects undertaken by the Commonwealth itself. Id. at 67–68.

The Commonwealth and Cemex de Puerto Rico, Inc., an intervenor, now appeal.

II. PRELIMINARY MATTERS

At the threshold, we must address the appellants' contention that Antilles lacks standing to challenge Laws 109 and 132 under a preemption theory. According to the appellants, Antilles stands to gain nothing by arguing that the BAA trumps the Puerto Rico statutes; for even if Antilles successfully advances that challenge, its cement would nevertheless remain barred from use in the Commonwealth's public works projects under the terms of the BAA itself. Although the appellants failed to raise this argument during the remanded proceeding, Article III standing is a jurisdictional question that must be resolved whenever it arises. See Weaver's Cove Energy, LLC v. R.I. Coastal Res. Mgmt. Council, 589 F.3d 458, 467 (1st Cir.2009).

To establish Article III standing, Antilles must allege “a concrete and particularized injury in fact, a causal connection that permits tracing the claimed injury to the defendant's actions, and a likelihood that prevailing in the action will afford some redress for the injury.” Id. (internal quotation marks omitted). The loss of sales resulting from the local laws' discrimination against foreign cement is plainly a “concrete and particularized injury” to Antilles that is traceable to the challenged laws. Our inquiry must therefore focus on the final element of standing: whether Antilles's injury will be redressed if Laws 109 and 132 are held to be preempted by the BAA.

To carry its burden of establishing redressability, Antilles need only show that a favorable ruling could potentially lessen its injury; it need not definitively demonstrate that a victory would completely remedy the harm. See, e.g., Monsanto Co. v. Geertson Seed Farms, ––– U.S. ––––, 130 S.Ct. 2743, 2752–54, 177 L.Ed.2d 461 (2010) (holding that plaintiffs had standing to challenge an injunction preventing them from planting a regulated crop, even though a decision vacating the injunction would enable plaintiffs only to petition for partial deregulation); see also Weaver's Cove, 589 F.3d at 467–68 (holding that a favorable decision would provide plaintiff “effectual relief” by removing “a barrier to achieving approval” even though additional regulatory hurdles would need to be...